How the Landlord Credit Bureau Helps Tenants Build Credit
Helping Tenants Build Credit with Rent Reporting
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Responsible Renters should be rewarded. This is all the more true if you want a stronger credit history or you live in a particularly competitive rental market.
Until the development of Rent Reporting, Tenants were unable to build credit through their monthly rent payments. This meant, a Tenant could pay rent on time and in full every month and never see the credit building benefits homeowners receive from their mortgage payments. Now with services like FrontLobby, and reporting agencies like Landlord Credit Bureau (LCB), Tenants can get the credit they deserve with improved credit scores and a strong rental history.
Can Renting Improve a Tenant's Credit Score?
There are many ways to build your credit score, but often Tenants don’t realize that they can use their monthly rental payments to improve both their credit score and payment history record on their Credit Report. Credit card companies and financial institutions have been reporting payments to the Credit Bureaus for years, but until recently, Tenants who pay their rent on-time every month have not had the same credit building advantages.
Ultimately, rental payment history is only one factor in determining someone’s overall credit score. But it can be a valuable one that encourages Housing Providers to select applicants who may have a limited or no credit history.
Get Your Rental Application Prioritized
Getting your rental application accepted, especially in markets where competition is high and Tenant pools are large, can be difficult for Renters with a less than desirable credit score. In fact, most of the time individuals with a low credit score are overlooked when applying a rental property.
The problem with this is a Renter’s credit score isn’t always an accurate indication of whether someone will pay rent on time, it is just one piece of a much larger Tenant profile. Those who are new to credit, like most students, or new to the country, may make ideal Tenants but because of their low credit scores rarely get their number one choice when it comes to housing.
With LCB, Renters can build a verified rental history, alongside their Credit Report. Later on, when applying for a new rental, it can be presented during the application process to demonstrate a history of on-time payments. When a potential Landlord reviews a Tenant’s application, and sees a verified LCB Tenant Record, they will be able to trust the applicant is a great choice, even if their credit score is not ideal.
The Benefits of Tenant Records
Landlord Credit Bureau helps Tenants establish a positive Tenant Record by being a conscientious Renter. With LCB, Renters have a way to make their rental application stand out, even if they do not have an ideal credit score or are in the process of building credit.
A Tenant Record from LCB is a rental history report that has been verified by the Tenant’s previous Housing Provider. It can be used when applying to a new rental as proof the Tenant will make an ideal resident. Housing Providers can also use LCB during their Tenant Screening Process as a trusted source of payment records.
When a potential new Landlord reviews an application alongside others and sees a LCB Tenant Record, they will instantly see what a great resident the applicant will make. In fact, a positive Tenant Record can help Renters skip the line and jump to the top of the pile.
How Does Renting Help Tenants Build Credit?
Renting can be a great way to help tenants build their credit, however, not just anyone can submit data to the Credit Bureaus. The first step is to choose a service that already reports rent payments. It’s important to choose a trusted service, like FrontLobby, as it will make the process easy and reporting reliable.
Once the rental payments start being reported, they will show as a new trade line on the individual’s Credit Report. This is similar to how other monthly payments like credit cards, student loans, and mortgages get reported. Rent reported as a trade line can be particularly impactful since payment history is one of the most important factors in determining credit scores, making up almost 1/3 of a credit score calculation.
On average, your payment history will account for 35% of your credit score.
Every on time rent payment will contribute to building excellent credit and over time will positively impact a Tenant’s credit score.
Why Does Credit Matter?
Equifax estimates that over 3 million individuals aged 18 and above in Canada are classified as “credit invisible,” indicating that they either lack a credit file or possess insufficient credit information to generate credit scores. An additional 7 million individuals may have two or fewer credit accounts on their credit file, indicating limited credit history or a “thin” credit file.
The implications of being credit invisible or having limited credit information on file can be far-reaching. Individuals in these situations often encounter difficulties in accessing credit products and face challenges in securing housing. Furthermore, they may be subjected to higher interest rates when they do manage to obtain credit, exacerbating their financial stress and potentially perpetuating a cycle of financial hardship.
Get the Credit and Rental Property You Deserve
Renters who are credit invisible, have limited credit information, or are searching in a desirable location, often face challenges when it comes to securing their desired rental property. However, there are services available that can significantly increase their chances of success. Two such options include Rent Reporting services and the use of rental application documents like Tenant Records.
Rent Reporting services provide renters with the opportunity to report their rent payments to Credit Bureaus. By opting for this service, Renters can build a positive credit history and demonstrate their reliability in meeting their financial obligations. Landlords and property managers are increasingly considering rental payment history as an important factor in their tenant selection process. By reporting rent payments, Renters can showcase their creditworthiness and increase their attractiveness as potential Tenants.
Rental application documents like Tenant Records can make a significant difference in the rental application process. These documents compile important information about the Renter, including verified Landlords references. Potential Landlords and Property Managers value Tenant Records as they offer insights into the Renter’s past rental experiences and are complimentary other Tenant Screening methods, like Credit Reports.
By utilizing services like Rent Reporting and providing detailed rental application documents, renters increase their chances of securing the rental property they want.
Are you registered to report your rent payments? If not, you may be missing your chance to improve your credit, build a positive Tenant Record, skip the line and get the home you deserve.